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Why MPs shot down JKIA concession proposal

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It is now official, the Kenya Airways’ (KQ) Privately Initiated Investment Proposal (PIIP) to Kenya Airports Authority (KAA) that sought to have the airline manage the Jomo Kenyatta International Airport (JKIA) will not be taking off.

On Tuesday, The National Assembly’s Transport, Public Works and Housing Committee dealt a blow to the concession proposal by expressing serious doubts over the airline’s capacity to run the airport, the committee in its draft report wants the government to nationalise Kenya Airways.

“Kenya Airways has not demonstrated that it has the financial capacity, relevant experience and the relevant expertise to manage JKIA as required by section 23 of the Public Private Partnerships Act,” reads one of the committee’s observations.

The David Pkosing led committee also observed that the proposed role of KQ in the concession proposal creates a conflict of interest with regard to its dealings with other airline operators at JKIA and may lead to the oppression of such operators.

Legislators also observed that the implementation of the concession would result in the loss of the regulatory certificate to operate JKIA and the last point of departure clearance Kenya enjoys with regard to its direct flights to the United States noting that it would take years for Kenya to be audited again and be granted similar approval.

The current regulatory certificates issued with regard to JKIA are not transferable to a third party.

MPs also faulted the the current remuneration of the KQ management, senior staff and pilots which they said is relatively high and does not accord with the financial performance of the company.

The airline’s results for the financial year ended December 2018 show that Managing Director Sebastian Mikosz raked in Ksh62.8 million despite the airline incurring a Ksh7.5 billion loss.

{Read: KQ bosses suffer crushing defeat in bid to takeover JKIA}

Pkosing’s committee also expressed reservations on the airline’s over-reliance on expatriates to run its operations.

Out of KQ’s 3,700 employees, 14 are expatriates whereas of the top 50 managers, 5 are expatriates thus representing 10% of the leadership team.

The constant leaks from KQ are linked to Kenyan managers who are said to be disillusioned with Mikosz leadership.

Mikosz brought on board Polish managers in 2017. It is alleged that the Kenyan managers were sidelined by the Polish management creating a Polish-Kenyan struggle for power.

Committee recommendations

  • The government nationalise Kenya Airways by establishing a holding entity with four subsidiaries including the JKIA Company, the Kenya Airports Authority (KAA), Kenya Airways and the Aviation Services College.
  • Mandate of the KAA be revised to managing all other airports and airstrips besides JKIA.
  • Resources of the holding company and revenue generated from its resources be utilised for the mutual benefit and development of its subsidiaries.
  • The government undertakes a staff rationalization programme with a view of retaining existing staff and harmonizing their terms of service and remuneration of employees who will be working under the Aviation Holding Company, including a review of the existing Collective Bargaining Agreements.

{See also: MPs order suspension of KQ’s takeover of JKIA}

  • Review of the aircraft leasing agreements entered into by KQ with a view to renegotiating better terms on account of the consolidated balance sheet of the Aviation Holding Company.
  • The holding company to be granted favourable tax concessions in order to enable Kenya Airways to compete favourably with its competitors.
  • All Air Navigation Services to remain within the exclusive mandate of the Kenya Civil Aviation Authority. The MPs recommended that KCAA be the body to collect en-route charges and aerodrome and approach charges.
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